Myself and another associate has seen this error using pine with gnome-terminal,
but it is not limited to German umlauts. Asian characters also do not show up.
However, to make this case more confusing, when I am in the pine message index,
and there are non-rendered characters (such as umlauts or Asian characters) in
either the the sender or subject line, then the characters from the message just
above the non-rendered one appear to be "copied and pasted" into the
non-rendered line. A bit confusing to explain, so I am attaching a tarball of
two PNG files that illustrate my explanation :)
pine_gnome-term_wrong.png shows a message index where the characters seem to be
"copied and pasted" from the previous line into the line with the non-rendered
characters. pine_gnome-term_correct.png shows the results of opening the e-mail
and then returning to the message index.